UPDATE 1-Bulgaria speaks to shareholder Oman about Corpbank rescue

(Adds quote, details, background throughout)

By Tsvetelia Tsolova

SOFIA, July 18 Bulgaria's finance minister spoke
to the head of Oman's sovereign wealth fund on Friday about help
for Corporate Commercial Bank and said the government now hoped
to engineer a private rescue rather than a state bailout of the
failing bank.

Corpbank, was forced into the control of Bulgaria's
central bank in June after depositors unnerved by reports of
shady deals by the bank's main owner withdrew more than a fifth
of its total deposits. A subsequent audit showed activities at
the bank "incompatible with the law and good banking practices"
according to the central bank.

A shareholder rescue was Prime Minister Plamen Oresharski's
first proposal for the bank, but he said it looked unlikely
after Russia's VTB bank, which owns just under a tenth
of Corpbank, declined to provide more money.

Bulgaria then estimated the public rescue cost at about
1.5-2 billion levs ($1.38 billion) but its planned bailout -
under which Corpbank would collapse, its assets move into a
subsidiary and depositors' money be guaranteed by the state -
has been opposed in parliament. The bailout could involve
Bulgaria raising new debt at the expense of its budget deficit.

Bulgaria's finance ministry issued a statement on Friday
saying that Finance Minister Petar Chobanov spoke by telephone
to the head of Oman's sovereign wealth fund - which owns a third
of Corpbank - about the prospect of the fund helping out.

Bulgaria's original bailout package would likely have
enforced losses on the Omanis, as well as VTB and Corpbank's
main owner - wealthy Bulgarian businessman Tsvetan Vassiley, who
has denied the allegations against him.

Friday's phone call revealed that the Omanis, who have never
publicly commented on the troubles at Corpbank, are still at
least considering putting money towards a rescue, according to
the finance ministry statement.

"Finding a private solution to the problem that does not
engage public resource is the most desired outcome of the
situation," the statement said. "Both sides reiterated their
readiness to make efforts to find such a solution."

Chobanov told Abdul Salam al Murshidi, the chief executive
of the State General Reserve Fund of the Sultanate of Oman, that
current shareholders would be given the chance to provide the
necessary capital and liquidity to the bank and that the state
would only intervene if that proved impossible.

Corpbank's top shareholder Vassilev has denied the
allegations against him and claimed the bank run was a plot
orchestrated by his rivals.

Bulgaria's central bank has said prosecutors will have to
determine whether Vassilev's withdrawal of 206 million levs from
the bank, via a third party, amounted to theft. Four bank
officials have been arrested since the audit, which the central
bank said proved "serious felony" had taken place.

The crisis spread quickly to another lender, First
Investment Bank, and forced Sofia to set up a
protective $2.3 billion credit line for its banks and look to
Europe to help supervise its lenders.

The central bank will continue to control Corpbank until
Sept 21, but there is still no political consensus on how to
rescue it, including to what extent its depositors and
bondholders will be protected.

The situation is further complicated by the fact that
Bulgarian Prime Minister Plamen Oresharski's technocrat
government is due to step down next week after the ruling
Socialist party's poor showing at the European Parliament
elections in May. A snap election is due to be held in October.
(Writing by Matthias Williams; Editing by Sophie Walker)

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MUMBAI, Dec 9 Three months ended September 30
(versus the same period a year earlier). All figures in billion
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September 2016 September 2015
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SOURCE TEXT:http://bit.ly/2hn1vcH
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